Wednesday, October 26, 2011

How much oil is there? 3 trillion barrels? 4 trillion? How do we know?

There is no single answer to that question, because the answer depends upon price. At $80/barrel, there is a certain amount of oil remaining. At $150/barrel, there is far more oil remaining. And so on. The reason is because we leave most oil in the ground, since it's uneconomical to extract at current prices. As prices increase, the amount of economically extractable oil increases also. So there is no single "amount" of oil remaining. The amount depends upon price.

The Supply of Oil

Most resources are distributed according to a "resource pyramid." A "resource pyramid" is divided into layers, with small amounts of easily-extracted resource at the top, and larger amounts of harder-to-extract resource in the middle, and vast amounts of difficult-to-extract resource at the bottom. At the very bottom of the pyramid is a very diffuse resource, which is availabile in massive amounts, but which costs a lot to extract because it requires so much energy and money to "filter" it out of some substrate.

Oil supplies are distributed according to a resource pyramid. At the top of the pyramid was a small amount of easily-accessible oil. When we started drilling for oil, it would sometimes "gush" out of the ground with great force after drilling only a shallow well. That oil was easily extracted and inexpensive, and it was all used up within a few years. After that, we had to move down the resource pyramid to more difficult (and far more plentiful) resources.

At the bottom of the oil pyramid are resources like shale oil and tar sands, which are very diffuse and difficult to extract. (In fact the lower strata of the resource pyramid aren't really oil at all but are hydrocarbons which are converted into oil using chemical processes, for example, coal-to-liquids). At the very bottom of the resource pyramid is manufactured hydrocarbons using (for example) nuclear power, gasification, and the fischer-tropsch chemical method to convert any carbon source into hydrocarbons. This technique could supply oil indefinitely at an EROI of about 5:1.

Implications

As oil becomes harder to extract, it also becomes more expensive, which opens up vast amounts of oil that were previously uneconomic. When we start to run out of oil, we take a step down the "resource pyramid" and start using the far larger (and more expensive) oil at the lower stratum. The result is that supply of oil increases, as price increases.

For this reason, oil production worldwide will not follow a bell curve or anything similar. Instead, oil will peak and then prices will gradually increase, thereby allowing us to extract previously uneconomic resources, and thereby preventing any decline. We'll know when we're transitioning to a lower stratum on the pyramid because prices will increase permanently by some amount. However this doesn't imply any kind of decline, because more oil may be available at that price.

Take the USA as an example. Oil production peaked in 1970 in the USA, as per Hubbert's prediction, and then declined for several years thereafter. Then something funny happened. In 1976, prices increased because of a cartel, and production started increasing again in the USA, years after it had peaked. When the cartel failed, and prices for oil started delining, production in the USA started declining again. Now, decades later, prices for oil are high again, and production in the USA is increasing again, decades after the peak! Clearly, production depends upon price and does not necessarily follow a bell-shaped curve.1

Of course, as oil prices increase, alternatives become relatively cheaper. Trains become cheaper than trucks, since trains use about 1/8th the energy per pound-mile. Hybrids become cheaper than convetional cars, since they cost only slightly more and use far less fuel. This trend will reduce demand, and further attenuate the decline.

Conclusion

Because of these facts, the very idea of "peak oil" as it's commonly understood (where we have a fixed amount of oil and it will follow a bell-shaped curve) is mistaken. Instead, we face a plateau or oil, or perhaps very gradual declines, for many years after the peak. Oil will not follow a bell curve or anything similar.

The doomer idea of applying a "bell curve" to worldwide production probably stems from their graphs of individual oil wells, which do in fact follow such a curve, roughly. But that doesn't mean that all oil wells in aggregate will follow a similar curve. It would be a tremendous mistake to assume that all oil wells will follow a bell-shaped curve because any one oil well has historically done so. Whereas an individual oil well doesn't increase prices as it depletes, the sum of all wells depleting will increase prices, and thereby increase supply and prevent subsequent decline.

As we deplete the cheaper oil, we will move down the resource pyramid, thereby increasing the price and the supply, and thereby attenuating any decline. We will never face an abrupt drop-off in supplies as a result of depleted resources, nor will we face anything like the 3% annual declines which doomers assume.2

If anything, we face a greater threat from China out-bidding us for oil than from declining production.

None of this implies a perfect future. We will face higher prices for oil in the future, particularly because of competition from developing nations, and this may force unwelcome changes to the American lifestyle, like driving hybrids instead of SUVs. However, we do not face rapid declines of oil, nor do we face any kind of interruption of industrial civilization.

2 I'm referring to abrupt declines caused by depletion of resources. Of course, it's possible there will be abrupt declines caused by war, disruption, severe economic downturn, etc. It's also possible there will be brief abrupt declines of a few percent based upon miscalculations because oil production does not follow a smooth curve. It's also possible there will be fairly rapid declines caused by peak demand. For example, it's possible that prices for oil would increase greatly, and the prices of batteries would decrease, to the point that plug-in hybrids became cheaper to operate than conventional cars. In that case there could be a rapid transition over the course of 15 years or so to alternative propulsion for cars, leading to a 5% annual decline or greater. That would mean that oil wasn't crucial anymore.

Saturday, October 8, 2011

Doomer literature is replete with stories of exponential growth and then collapse. It's one of their favorite themes. Some doomer sources (like Albert Bartlett, or the 7th fold) focus on exponential growth as their primary topic. In fact Albert Bartlett has famously claimed (famously in doomer circles anyway) that the inability of most people to understand exponential growth is one of the great problems facing the world today.

The reason exponential growth is a topic in doomer circles, is because exponential growth of almost any important quantity will lead to disaster before very long. For example, exponential growth of population, by 4% per year, would lead to 6.5 million times as many people in the world in 400 years, necessitating a massive die-off. And exponential growth of energy usage, by a few percent per year, would lead to the oceans boiling in only a few centuries. In most cases, sustained exponential growth leads to die-off or collapse before very long. Just look at colonies of bacteria or yeast, which (as doomers frequently point out) grow exponentially until they suffocate in their own waste or exhaust their food supply.

There is only one big problem, with all this talk of exponential growth and then collapse. The problem is: no important quantities are growing exponentially.

Take energy consumption as an example. Energy consumption is not growing exponentially. In fact, energy consumption per capita isn't growing at all, not even linearly, and hasn't grown much for decades. This point should be obvious to anyone over age 40, by just looking around and then remembering how things used to be. Do you use exponentially more electricity than in 1970? Do you set your thermostat 3% higher every year? Do you use exponentially more gasoline than in 1970? In fact, you probably use less gasoline, if your car in 1970 was anything like my parents' cars, which got about 10 mpg.

In fact, energy usage per capita has been essentially flat for the last 5 years or so, and was growing only very slowly in the 2 decades before that, and not at an exponential rate.

Well, even if energy usage per capita isn't growing exponentially, isn't the world population growing exponentially? Don't we face exponentially more people, and so exponentially more resource usage even if resource usage per capita remains the same?

No, the population of the world is not growing exponentially. In fact, the population is growing, but at a declining rate. Already, the rate of population growth has reached 0% in many industrialized countries, and is declining rapidly in developing countries. Furthermore, there is every reason to believe that the rate of population growth in developing countries will also reach 0%, since they're basically following the same pattern which industrialized countries have laid down. As a result, most professional demographers believe that world population will level off at between 10 and 12 billion people.

Well, isn't the economy growing exponentially? We see figures like "3% growth this year" which seems to imply it's growing exponentially, right? And, since we need energy for economic growth, doesn't that mean that the rate of energy usage is also growing at 3%?

First, economic growth isn't the same thing as growth in energy consumption. (This mistake is very common). The term "economic growth" refers to growth in production of things you can buy. If someone invents a new drug, he has caused the economy to grow, even if manufacturing that drug takes less energy than manufacturing the older equivalent.

Second, the economy is not growing exponentially. The rate of economic growth is delining everywhere. As economies mature, their rates of growth decline. This has already happened in all first-world countries, which do not enjoy anyhwere near the rates of growth of (say) China or India.

Thus, essentially no important physical quantity is growing exponentially1. Population is not growing exponentially. Energy usage is not growing exponentially. Industrial output is not growing exponentially. The economy is not growing exponentially. Food production is not growing exponentially.

Since these quantities are not growing exponentially, it would be a basic mathematical error to use exponential functions to model them.

Both population and energy usage will grow and then level off before very long. There is ample historical precedent for this.

NOTES

1 The term "exponential growth" refers to a mathematical function like this: f(t)=bt where b is constant. If b is not constant, then it's not an exponential function. None of the quantities listed in this article are growing according to an exponential function.

Wednesday, October 5, 2011

Thermodynamics is a recurring theme in doomer literature. Doomer sites are filled with talk of thermodynamics, especially the second law of thermodynamics. This is not surprising, since borrowing terms from rigorous disciplines like physics could lend credibility to the doomer thesis. Also, the second law of thermodynamics does have a superficial rhetorical similarity to the doomer thesis insofar as it implies "decline" of some kind.

Quite frequently, doomers will claim that the laws of thermodynamics imply a near-term energy descent scenario ending in the collapse of civilization. After all, the second law of thermodynamics states that entropy is always increasing, and that energy gradients available to do work are always decreasing. Doesn't this imply that the net energy available to us to do work must always decrease, as a matter of inevitable physical laws? As usable energy decreases, mustn't civilization collapse?

For example, here is a quotation from the first few sentences of dieoff.org:

"Calculations show that conventional oil production 'peaked' in 2005, so it is now physically impossible (thermodynamics) to increase 'net energy' as we have in the past."

...and this kind of talk is extremely common in the doomer literature.

However, the doomer literature contains extremely grave misconceptions about what the laws of thermodynamics really claim. For example, the second law of thermodynamics states that energy of all kinds, including matter (which is convertible into energy), will tend to equilibriate, in an isolated system. Please note the bold portions of the prior sentence, since those parts are often forgotten or omitted in doomer accounts of the second law of thermodynamics. Thus, the second law of thermodynamics would imply doomer energy descent only if all three of the following conditions were met: 1) we lacked the technology to convert matter into energy; 2) the Earth were an isolated system; 3) fossil fuels were the only form of energy available to us. If all three of these conditions were true, then and only then would the laws of thermodynamics imply a doomer energy descent scenario, because then we would have no other possible sources of energy when fossil fuels are depleted. However, none of those three conditions is true. Specifically, matter can be converted into energy, so we can switch to nuclear power and more than offset a decline in fossil fuels1. And, the Earth is not an isolated system, but is continually bombarded by energy from the Sun, so we could harness this energy and more than offset a decline in fossil fuels. Note that these alternatives are compatible with the laws of thermodynamics.

Of course, we'll still gradually "run out of energy", since the other sources of energy aren't infinite either. The second law of thermodynamics really does imply a long-term energy descent over many billions of years. The Sun will gradually dim over billions of years. Nuclear fuel will gradually be exhausted over millions of years (or billions of years, for fusion).

However, we don't face any kind of inevitable energy collapse over the next few centuries since fossil fuels are not the only kind of energy to which the laws of thermodynamics refer.

...

As our supplies of fossil fuels gradually diminish over the next 150 years, we will face several different options, as follows:

We could gradually transition to renewable sources of energy like wind power, solar thermal, and so on.

We could gradually transition to nuclear reactors, and then breeder reactors.

We could develop hot fusion as an energy source.

We could do nothing whatsoever about the situation, as the energy available to us declines gradually over decades or centuries, until civilization collapses and we revert to a tribal state.

The laws of thermodynamics are compatible with all these scenarios. Furthermore, the laws of thermodynamics provide no guidance whatsoever as to which of these scenarios will occur. This is an economic calculation problem, the answer to which cannot be derived from the laws of thermodynamics.

Also, please note that all of the above scenarios are sustainable in the long run. Whether we transitioned to renewable energy, or breeder reactors, or hot fusion, or neo-tribalism, we could continue along with our chosen strategy for hundreds of millions of years. Note that I'm not claiming we could increase our rate of energy consumption exponentially for hundreds of millions of years. I am claiming, however, that we could provide power to 10 billion people at a first-world standard of living for hundreds of millions of years.

In conclusion. The laws of thermodynamics provide no support whatsoever to the doomer thesis of imminent energy descent2. Although doomers frequently invoke the laws of thermodynamics, those laws provide no support for their conclusions, unless we wrongly assumed that the Earth were an isolated system, that matter is not convertible into energy, and that fossil fuels were the only source of energy.

In fact, the laws of thermodynamics are compatible with a wide range of outcomes for civilization, including the outcome of sustained first-world living standards for a large, stable population for a very long time.

NOTES:1 Of course, this would require energy storage (like batteries) if we are to use nuclear power for cars. However batteries are compatible with the laws of thermodynamics and this point isn't really relevant here.2 Of course, the laws of thermodynamics do imply a long-term energy descent. Eventually, our Universe would face a "heat death" where entropy had reached its maximum. Before the heat death occurs, our Universe would face a situation where almost all usable energy had been exhausted and very little was happening. This would happen in about one quadrillion years. This kind of "energy descent" really is implied by the laws of thermodynamics. However the near-term energy descent featured in doomer literature is not at all implied by the laws of thermodynamics.